A good starter emergency saving fund should cover 3 times your monthly living expense. This is money you would have readily available to deal with emergency situations. Think of a car breakdown, heater not working, unplanned travel, etc. How do you ensure you are not starting a new debt cycle to cover for these unplanned but required spending?
If you have never saved or had limited success of saving money in the past, saving 3 times your monthly living expense can sound challenging. Following these simple steps can help you with your goal of creating your own emergency fund. It is an important step to reduce financial stress and have peace of mind when an emergency event strikes.
Step 1: Create a separate account where savings are easily accessible
The goal for the emergency savings is that the funds should be available when you need them. At the same time, consider saving in accounts where you are not easily tempted to spend on a daily basis. Also, make sure the account type you open does not have charges to withdraw the saved money. QUBER vault provides you with the perfect solution to keep your savings in a safe and separate account—different than one you would normally tap into. There are no penalty or charges on withdrawing your savings. There is no lock period.
Step 2: Budget, and start saving small
See where you are spending every month. Pay attention to how much you spend eating out, subscribing to streaming services, and buying things you can live without. Becoming aware of your spending patterns is a critical step to understanding how much you can save and where to focus.
If you are not in the habit of saving, start small. Some people might start with a savings goal of $90 or $150 a month—which translates to $3 to $5 per day of saving. With continued savings you would have $1080 to $1800 after the first year. Most QUBER users start small and on an average save $170 / month.
Breaking it down to achievable smaller goals will make your saving goals less intimidating.
Step 3: Everyday savings add up
If you eat lunch daily at restaurants, consider packing your lunch from home; make your coffee at home at least 3 times a week. Use QUBER’s one tap “Tap to save” feature to account for the times you packed lunch from home or made coffee at home. Each tap saves you money.
Do the same when you save money by using public transportation or meeting your fitness goal for the day. The daily savings add up quickly.
People that fail at saving money or struggle to pay off debt keep their promises to a general level such as, “I want to save money this year” or “I want to pay off my debt.” The idea here is to be specific and cut expenses consistently.
Check out our article on 8 tips for a successful no-spend day!
Step 4: Create a plan for your debt
Many North Americans are finding it hard to pay their debt off. When you are in the debt cycle, it is not easy to think about saving or investing money. Pay attention to the debt that have high interest payments. Check the detailed expenses as well as bank statements that shows the monthly payments you are making. Just like creating an emergency saving fund, create a plan to pay the high interest debt.
If you have a handle on paying off your loan payments—either because you already have an action plan for these payments or the rates are lower, consider saving for emergency funds while paying off your debt. The two-pronged approach can serve you well in the future.
Step 5: Automate your savings plan
Saving consistently is important. Once you know where you are spending and how you will save, automate the daily saving opportunities so that the money moves from your chequing account to the emergency fund account. In addition to the daily savings, consider automated transfers coordinated with your pay period. Most people start small— think 1% or 2% of your paycheque or income. Savers using QUBER app automate moving a percentage or amount of pay on their payday. This pre-determined amount moves from chequing account where payroll is deposited to the account where emergency funds are saved.
Maybe you would like to put money away every Thursday— you can do it in QUBER. The possibilities to save are many. Choose what works best for you.
The key is to create enough savings to cover for unexpected events that draw on your money. Once you hit the initial goal of 3 months, target to save to cover for 6 months of expenses and then for 9 months of expenses.
Your saving habits coupled with automation can be used to meet other financial goals such as saving for your next vacation. More money saving ideas here: Our top 5 saving ideas